US Dollar Gives Up Early Gains Against the Japanese Yen

US Dollar vs Japanese Yen Technical Analysis

The US dollar initially rallied during the trading session on Monday but gave back gains to show the ¥130 level as an area of resistance. This of course is a large, round, psychologically significant figure, which of course will attract a certain amount of trading pressure. Breaking down below the bottom of the candlestick for the Friday session would open up more selling pressure, perhaps reaching the ¥127.50 level underneath which of course is an area where we had bounced from previously.

On the upside, breaking above the ¥131.33 level would be a strong sign that we are going higher, but quite frankly this pair has gotten overdone. At this point, I think short-term pullbacks make a certain amount of sense, as it offers value in a market that is obviously a very bullish setup. The interest rate differential between the United States and Japan continues to be a major driver of where we are going, especially as the Bank of Japan continues to do “whatever it takes” to keep interest rates down to 0.2%, quite frankly, as they continue to buy bonds it is the same thing as “printing yen.”

In this scenario, especially with the Federal Reserve looking to tighten monetary policy, I think any pullback will more than likely attract buyers given enough time. Ultimately, the market changing trends are something that would take a Herculean effort, and obviously a change in attitude from both central banks. At this point in time, it is very unlikely that is going to happen anytime soon.

USD/JPY Price Forecast Video 03.05.22

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